In an effort dubbed “Operation Hyphen,” Kraken, the renowned cryptocurrency exchange, collaborated with the South East Regional Organised Crime Unit (SEROCU) to recover and return over $2 million worth of stolen cryptocurrency linked to a major crypto scam.
Scammer Receives 4 Years In Prison For 10 Million Euro Crypto Heist
The investigation centered around the fraudulent website “iotaseed.io,” created by Wybo Wiersma, a 40-year-old individual from the Netherlands. Wiersma allegedly exploited “unsuspecting victims” by offering an alleged secure platform for generating 81-digit IOTA crypto seeds.
However, without the users’ knowledge, the seed phrases were predetermined by Wiersma, allowing him to gain control over their tokens.
According to a statement from the UK’s Organized Crime Unit, between 2017 and 2018, Wiersma transferred more than €10 million worth of IOTA tokens from multiple victims to various cryptocurrency trading accounts.
This illegal activity came to an end when he was arrested and subsequently sentenced to four and a half years in prison for theft.
Under the Proceeds of Crime Act, SEROCU seized approximately £2.37 million in cryptocurrency from an exchange, making it the first instance in the UK where such legislation was employed to confiscate assets from a cryptocurrency exchange.
During the court proceedings, Wiersma was ordered to pay £2.1 million, with a portion of the amount sourced from the seized cryptocurrency. The remaining funds were earmarked for restitution to the victims, who numbered between 50 and 60 individuals worldwide.
However, returning the stolen funds to the victims posed a considerable challenge. SEROCU partnered with Kraken to overcome this hurdle and sought guidance from the Financial Conduct Authority (FCA) and the National Police Chief’s Council (NPCC).
According to SEROCU, leveraging its expertise and compliance measures, Kraken facilitated the conversion of the recovered crypto assets into GBP, ensuring a lawful and transparent process in line with regulatory requirements.
Kraken Role In Returning Stolen Crypto Funds
Detective Inspector Rob Bryant, heading SEROCU’s Cyber Crime and Cryptocurrency Unit, expressed gratitude for the collaboration and innovation displayed throughout the investigation by the exchange.
Assistant Chief Constable Tim Metcalfe, the National Police Chiefs’ Council Lead for Cryptocurrency, highlighted the importance of leveraging partnerships with industry leaders to ensure justice for victims and deter criminals.
Metcalfe commended the collaborative effort between law enforcement and the private sector, which enabled the victims to reclaim their stolen funds.
Lana Sinelnikova, UK Head of Compliance at Kraken, stressed the significance of maintaining “robust security protocols” and compliance standards within the cryptocurrency ecosystem.
Kraken’s head of compliance officer also urged individuals planning to participate in cryptocurrencies to educate themselves about common scams and red flags, emphasizing the need for increased confidence and trust in the technology and its players.
Matthew Barber, Police & Crime Commissioner for Thames Valley, expressed his delight at the operation’s results, highlighting the return of nearly £2 million of cryptocurrency to fraud victims worldwide.
Barber emphasized the need for continued innovation to counter the ever-evolving tactics employed by scammers in exploiting unsuspecting individuals.
Featured image from Shutterstock, chart from TradingView.com